How does Mobile Pay work?
More and more shops in Germany are offering contactless payment via smartphone app as a payment method. Most of these apps use the so-called NFC technology, in which a chip built into the smartphone transmits the data to the retailer’s device when paying. A one-time transaction code is generated that is only valid for the purchase in question. The smartphone must be unlocked and held close to the device. The now well-known radio wave symbol on the reader provides information on whether the retailer supports mobile payments. Although the NFC method is the most common, some smartphones also use QR or barcodes.
The right app for the right smartphone
As with credit cards, there is also a certain variety of mobile pay apps because not every app can be used on every smartphone. The provider’s payment app is pre-installed on most devices; Apple, for example, only allows the deposit of customer cards from supermarket chains and systems with QR or barcodes, apart from the in-house Apple Pay. For Android users, the options are a bit more diverse: In addition to Google Pay, Google also gives customers the choice between the apps of the smartphone manufacturers, those of the banks and stored customer cards.
Higher security than with a credit card
Although an EHI survey showed that many users still have concerns about Mobile Pay, paying by app actually has a lot more security than plastic cards. Unlike credit cards, the card number on smartphones is not stored on the device. In the case of transactions via the app, neither personal nor account-related data is transmitted; instead, everything runs via the transaction code (token) already mentioned above, which is generated specifically for each purchase and which expires immediately after the purchase. The two-factor authentication via fingerprint or face scan clearly assigns the stored card to the authorized user, which makes theft considerably more difficult. If the screen is off, the same applies to the chip in most cases. Also, a transaction “accidentally passing by” is basically impossible, since the smartphone has to be held very close to the reader for a successful transaction. The risk of annoying double bookings is also eliminated, because the terminal has to be activated again after each transaction.
How about data protection?
Of course, when shopping via app, the question still arises as to how much information the customers reveal about themselves. If you use such an app, it may well be that information about your own purchasing behavior is transmitted to the provider, so that other companies could also find out about the payment transactions made. If you opt for the house bank’s app, this risk is at its lowest, since banks are normally not interested in information of this kind. Nevertheless, it is possible that apps from credit institutions also collect data for evaluation for advertising purposes. With supermarket apps in particular, on the other hand, customers share a lot of information about their purchasing behavior by using the apps in exchange for advantages such as discounts and offers. However, it must be said here that it is no different with credit and debit cards.
Thomas Weschle / Editor finanzen.net
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